The Correlative Study Between Education Investment And Economic Growth

The 21st century is knowledge economy times, and the essence of knowledge economy is innovation. Because the main body of innovation is the talent person, the education which cultivates the talent person is the foundation to develop knowledge economy. The development of a national education decides its science and technology innovation ability, thus decides its economic growth rate. Making a comprehensive view of developmental courses of developed countries and our country, they all explain educational development makes contribution to economic growth. The developmental history of world economy indicates that human capital's contribution to economic growth cannot be substituted. Education investment provides a material guarantee for developing education business. Currying out the strategic status of education prior development must increase the scale of education investment. Therefore, it is full of significant meanings and helpful for social economic development in China, the adaptation to new form-changing from industrial economy to knowledge economic pattern and currying out the strategy of science and education vitalizing the state and the goal of surpassing the developed countries in China to investigate the research on Chinese education investment, especially on the impact of Chinese education investment to economic growth, which has important theoretical and practical significance.This paper mainly deploy from three aspects:First of all, it analyses Chinese aggregate education investment proceeding with absolute quantity and relative quantity. In the absolute quantity analysis part, in view of the fact that there aren't statistical figures for total educational expenditures and government appropriation for education in China Statistical Yearbook during the period of 1952~1978, in order to have comparability among each history year, use government budgetary education expenditures as measure index to educational expenditures in this part. Through the analysis it comes to the conclusion that:Firstly, finance using for educational expenses obviously divides into two stages: the first stage is before the reform and opening-up, financial education expense basically is in a state of pacing up and down. The second stage is from reform and opening-up to the present, financial education expense is in the rapid growth stage.Secondly, from the view of growth rate of government budgetary education expenditures, it fluctuated quite evident before 1971; government budgetary education expenditure is maintaining positive growth after 1971; after reform and opening-up, the growth rate of government budgetary education expenditures has fluctuated around 17%.In the relative quantity analysis part uses two indexes: one is the educational expenses as percentage of GDP; the other is government budgetary education expenditures as percentage of government budgetary expenses.Through the analysis this part comes to the conclusion that: Chinese government budgetary education expenditures as percentage of government budgetary expenses comparing with other countries'in the world, the gap is not obvious in the same period, but there is a big gap between Chinese government budgetary education expenditures as percentage of GDP and other countries of the world in the same period. This paper considers that the smaller government revenue as percentage of GDP is the root reason for the shortage of educational expenditure.In the next place, it analyses the source structure of education investment expenditure proceeding with source composing of education investment expenditure and the change of it. Through the analysis this part comes to the cognition that:Firstly, at present, the main source of Chinese education expenditure is government appropriation for education, and funds of social organizations and citizens for running school as percentage of total education expenditure is small. That obviously has a big gap compared with western developed market economy countries. Therefore, to further promote the society to run schools is an important avenue to resolve the lack of funding for education.Secondly, since 1993 the proportion of government appropriation for education has been in descent stage; budgetary education expenditures also had been declined, and this ratio has risen slightly after 1999. The proportion of tuition and miscellaneous fees increases. The main reason leading to this change is the reform of colleges and universities'charge institution. It heightens the standard of the charge and expands the scope of it.Finally, this paper analyses the correlation between education investment and economic growth from the point of view of demonstration analysis. Take EViews (econometric software package) as analysis tool, collect statistical data which excluded the price factor and use time series econometric analytical method- unit root test and Granger causality tests to reveal the inherent dependence relationship between education investment and economic growth. Construct mathematical models through simple linear regression analysis and generalized difference regression analysis. The result shows that: Chinese education investment's contribution rate on economic growth is about 12.5%. Considering the different stages of economic development, the difference of the educational resource allocation caused by market mechanism leads education investment play the very different role in economic growth. This paper divide 1952~2005 into two phases: 1952~1977 and 1978~2005 to explore the contribution of education investment on economic growth in different economic development stage. Regression models show that, Chinese education investment's contribution rate on economic growth is about 11.4% from 1952 to 1977, and from 1978 to 2005 the contribution rate is about 28.5%. This shows that the promotion of education investment to economic growth has heightened 17% after carrying out the implementation of market-oriented economic system reform.Based on the above analysis this paper considers that: at present, Chinese education investment lags far behind the developed countries and many developing countries both in relative quantity and absolute quantity. Demonstration analysis shows that there is an inherent dependence relationship between education investment and economic growth. Education investment is a major driving force in promoting Chinese economic growth. Therefore, it has important strategic significance for Chinese economic development to fully understand the importance of education investment to economic growth and change the current lack of education investment. Governments should conscientiously implement education development priority strategy, continually expand education fund-raising channels to actualize diversification in subjects of education investment and further promote social activities to make donations to schools. Guarantee the governments'investment in education through legislation and law enforcement in education investment. Make Chinese education investment to meet the requirement for the development of knowledge economy era.